AccessLex Supports

“… AccessLex Institute has long advocated for responsible borrowing, offered quality counseling, and encouraged diligent and timely repayment. However, we recognize that access-driven student loan programs will necessarily lead to some borrowers who are unable to repay the debt—and until we have a working crystal ball, defaults and, in some cases bankruptcies, are a necessary cost of maximizing the intellectual capital of the country.

In our view, there are three core factors which must be properly calibrated to maximize the efficacy of the substantial investment in higher education by various stakeholders and the value to the country as a whole.

• First, equal and affordable opportunities for all who pursue higher education, which forms the basis of the Higher Education Act;

• Next, the ability for the “honest but unfortunate debtor” to obtain a “fresh start,” while promoting equitable treatment of creditors, representing the core tenets of the Bankruptcy Code; and

• Finally, the ready availability of capital to allow Americans to reliably and affordably pursue their educational dreams, a factor equally applicable to both the government as a lender and private sector lenders.

In that spirit, we propose a return to the framework that existed immediately prior to the 1998 Higher Education Act amendments, with one substantive addition. Specifically, we propose that the Undue Hardship standard remain for loans which:

• first enter repayment within the 7-year period preceding the applicable bankruptcy filing; or,

• without regard to time in repayment, are eligible to participate in an income-driven repayment plan providing for monthly payments no greater than 15% of discretionary income with loan forgiveness available after a period no longer than 25 years.

All other student loans would be evaluated in bankruptcy proceedings consistent with other consumer debt.

In addition, we encourage Congress to revisit the definition of Undue Hardship. The term has never been defined by Congress and the judiciary’s attempts have resulted in an unduly strict standard that is unevenly applied...”

AccessLex Speaks…

Currently, 45 million Americans hold more than $1.7 trillion in student loan debt. Unlike most other types of debt, student loans are not dischargeable in bankruptcy except in extremely rare circumstances.

On August 3, AccessLex President and Chief Executive Officer, Christopher P. Chapman, testified before the Senate Judiciary Committee on Student Loan Bankruptcy Reform.

AccessLex Supports…

Our policy experts track legislation and regulations that have the potential to impact students and the legal education community. And we work hard to steer these critical conversations. Over the past year, we have sent letters of support and suggestions to Senate Committees on issues including bankruptcy reform, PSLF, funding for HBCUs and many more.

July 27, 2021

The Honorable Robert Scott, Chairman House Education and Labor Committee 2176 Rayburn House Office Building Washington, DC 20515

The Honorable Virginia Foxx, Ranking Member House Education and Labor Committee 2101 Rayburn House Office Building Washington, DC 20515

Dear Chairman Scott and Ranking Member Foxx:

AccessLex Institute is pleased to offer its support for H.R.4631, the Protecting Our Students by Terminating Graduate Rates that Add to Debt (POST GRAD) Act, which would reinstate the in-school interest subsidy for graduate and professional students who borrow federal Direct Stafford Loans.

AccessLex Institute, in partnership with its nearly 200 nonprofit and state-affiliated ABA-approved member law schools, has been committed to improving access to legal education and to maximizing the affordability and value of a law degree since 1983. The AccessLex Center for Legal Education Excellence advocates for policies that make legal education work better for students and society alike and conducts research on the most critical issues facing legal education today.

The Budget Control Act of 2011 eliminated Direct Subsidized Loans for graduate students. While graduate students can still borrow the same aggregate amount in Direct Loans, they can only borrow unsubsidized loans, which accrue interest while borrowers are enrolled in school. Loss of the in-school interest benefit for graduate and professional students increases their loan balances by thousands of dollars, decreasing both access to and the value of advanced education. Introduced on July 22, 2021 by Representative Judy Chu (D-CA), the POST GRAD Act would restore parity between undergraduate and graduate education funding policy by reinstating graduate students’ eligibility for federal subsidized student loans.

As more jobs in today’s economy require an advanced degree, it is critically important that Congress advance polices that enable students to enter into these jobs and provide much needed services to individuals across this country. The POST GRAD Act would meaningfully lower the cost of graduate education for students who may not be able to otherwise afford it.

Thank you for your time and attention to this matter. If you have any questions, please do not hesitate to contact Nancy Conneely, Managing Director of Policy, at nconneely@accesslex.org.

Sincerely,

Christopher P. Chapman President and Chief Executive Officer April 7, 2021

The Honorable Patty Murray Chairwoman Senate Health, Education, Labor, and Pensions Committee 428 Dirksen Senate Office Building Washington, DC 20510

The Honorable Richard Burr Ranking Member Senate Health, Education, Labor, and Pensions Committee 154 Russell Senate Office Building Washington, DC 20510

Dear Chairwoman Murray and Ranking Member Burr:

AccessLex Institute is pleased to offer its support for S. 847, the Student Loan Tax Elimination Act. Introduced on March 18, 2021 by Senators Mike Braun (R-IN), Kyrsten Sinema (D-AZ), Chris Coons (D-DE), Josh Hawley (R-MO), Raphael Warnock (D-GA) and Elizabeth Warren (D-MA), the bipartisan Student Loan Tax Elimination Act would eliminate costly origination fees on federal student loans disbursed on or after March 27, 2020.

AccessLex Institute, in partnership with its nearly 200 nonprofit and state-affiliated ABA-approved member law schools, has been committed to improving access to legal education and to maximizing the affordability and value of a law degree since 1983. The AccessLex Center for Legal Education Excellence advocates for policies that make legal education work better for students and society alike and conducts research on the most critical issues facing legal education today.

Origination fees reduce the amount of loan dollars disbursed to borrowers by a certain percentage (1 percent for Direct Stafford Loans and 4 percent for Direct PLUS Loans). This structure creates confusion and increases costs for borrowers, who are responsible for repaying the withheld amount, plus the interest that accrues on that amount. This can result in hundreds or thousands of additional dollars owed, depending on loan type, loan amount and program length. It also adds administrative burden for financial aid administrators who have to readjust the fees each October 1 after the academic year has begun.

The Student Loan Tax Elimination Act would enhance access and affordability of higher education for students and help reduce the complexity of the federal student aid system.

Thank you for your time and attention to this matter. If you have any questions, please do not hesitate to contact me at cchapman@accesslex.org or Nancy Conneely, Director of Policy, at nconneely@accesslex.org.

Sincerely,

Christopher P. Chapman President and Chief Executive Officer